Deutsche Telekom remained tight lipped over reports it has agreed a deal to sell nearly all of its T-Mobile US business to SoftBank-owned rival Sprint.
A spokesman today told FierceWireless:Europe the company does not comment on rumour and speculation, after Japan's Kyodo News reported a deal between the German operator and its Japanese counterpart SoftBank was reached on Thursday.
The agreement would see Deutsche Telekom maintain a minority 15 per cent stake in T-Mobile US in a bid to ease the concerns of regulators over the effects of a merger that would cut the number of mobile network operators in the US from four to three, Reuters reported. A deal on those terms would allow Deutsche Telekom to exploit synergies created by the merger, while also cutting the amount Sprint would have to pay, the news agency noted.
While rumours of a deal have been rife in recent weeks, analysts with investment bank Jefferies remain sceptical that Deutsche Telekom and SoftBank will win regulatory approval for the proposed deal.
In an emailed statement, the company said that a deal "might well be announced, but would likely struggle to pass regulatory scrutiny."
Jefferies also noted that Deutsche Telekom faces competitive threats in its domestic fixed-line business and pricing risk in its home mobile business. Other risk factors listed include foreign exchange fluctuations in Eastern Europe, "and execution risk in the US."
T-Mobile US delivered better-than-expected subscriber numbers to Deutsche Telekom in 2013. However, Jefferies noted the success "required unexpectedly high investments" in the business.
Deutsche Telekom CEO Tim Hoettges said he would pursue mergers and acquisitions when he took up his post in January.
In early May, Hoettges said he was keen to combine T-Mobile US with another carrier in the market, "to create a super maverick against AT&T," sister publication FierceWireless reported. However, the Deutsche Telekom chief added that the U.S. Federal Communications Commission (FCC) and Department of Justice were unlikely to clear any merger, due to a desire to maintain the number of operators in the country at four.
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